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2007 DIGILAW 244 (KAR)

Revathi v. Commissioner of Income-tax

2007-04-03

ANAND BYRAREDDY, R.GURURAJAN

body2007
JUDGMENT R. Gururajan, J.— Assesses is before us in this reference. According to the facts of the case, the assessee is an individual deriving income from 13 AOPs as a member. For the assessment year 1983-84, the appellant derived Rs. 60,853/- as share from 13 AOPs. She was having 1/3rd share in all these AOPs. The AOPs were beneficiaries of M/s. Chengamma Family Foundations, which is a private specific trust, 99% of the total income of the Associations of persons was shared equally among the members and the balance 1% remains discretionary. Each of the thirteen Association of persons received about Rs. 14,044/- as share of beneficiary interest from Chengamma Family Foundations. The assessee claimed rebate Under Section 86(V) of the Income Tax Act. The ITO allowed rebate from AOP from which income has levied and paid. Aggrieved by the order, an appeal was filed before the Commissioner of Appeals. The Commissioner of Appeals accepted the order of ITO. Matter was taken before the Tribunal. The Tribunal confirmed the order of the Assessing Officer. It is in these circumstances, the Tribunal has chosen to refer the following question of law in terms of Section 256 of the I.T. Act. Whether, on the facts and in the circumstances of the ease, the Tribunal is correct, in holding that the assessee was not eligible for relief Under Section 86(v) as a member of the AOP's in respect of the specific portion of income of the AOP's on the ground that the said portion being below the taxable limit had not suffered tax in the hands of the AOP's. 2. Sri. Shankar, learned Counsel appears for the assessee. He would reiterate the facts and grounds raised in the petition. According to him, Section 167A would provide for charge of tax where shares of members unknown. He says that Section 167A would provide for a method of calculation. According to Sri. Shankar, learned Counsel his client is entitled for rebate on the entire share and not on the share of the assessee as has been held by the authority. He would strongly require us to interfere in the case on hand in the light of the language Under Section 86(v) r/w. Section 167A of the Act. He relies on Commissioner of Income Tax Vs. Smt. Lalita M. Bhat, (1996) 221 ITR 257 Bom. 3. Per contra, Sri. Seshachala, learned Counsel supports the order. 4. He would strongly require us to interfere in the case on hand in the light of the language Under Section 86(v) r/w. Section 167A of the Act. He relies on Commissioner of Income Tax Vs. Smt. Lalita M. Bhat, (1996) 221 ITR 257 Bom. 3. Per contra, Sri. Seshachala, learned Counsel supports the order. 4. After hearing, we have carefully perused the material on record. Admittedly, all the three authorities have held against the assessee. Assessee has been provided the partial benefits Under Section 86(v) of the Act. The assessee wants Section 86(v) to be considered thereby he gets the entire benefits on the facts of this case. Section 167A would deal with association of persons-special Cases. Section 86(v) would read as under: Income tax shall not be payable by an assessee if the assessee is a member of an association of persons, or a body of individuals other than a Hindu undivided family, a company or a firm, any- portion of the amount which he is entitled to receive from the association or body on which Income Tax has already been paid by the association or body. 5. The authorities have provided the benefit to the extent which the assessee is entitled in the case on hand. What the assessee wants is that in the event of the AOP making over the tax, the whole sum qualifies for exemption. A careful reading of Section 86(v) would show that two conditions are necessary for claiming exemption or rebate: 1) the rebate will be allowable provided the association has paid the income tax. 2) The rebate will be allowable only in respect of that portion of the income on which tax was paid by the association. 6. The wordings "any portion" and the wordings "in which income tax has already been paid by the association" would evidence that the benefit is available only to that portion which has suffered tax and not for the whole amount. In fact, the Tribunal has chosen to consider this in its order. We are in agreement with the said findings of the Tribunal. Any other interpretation would result in reading much more than what is provided Under Section 86(v) of the Act. We are not prepared to read the Section the way in which the assesses wants us to read thereby providing more benefits which is not otherwise available to an assessee under the Act. Any other interpretation would result in reading much more than what is provided Under Section 86(v) of the Act. We are not prepared to read the Section the way in which the assesses wants us to read thereby providing more benefits which is not otherwise available to an assessee under the Act. In our view, the question of law has to be answered in favour of the department and not in favour of the assessee. The Judgment on which reliance is placed, if read would show that the said Judgment is not available to the facts of this case. In fact, the Bombay High Court in the case of Commissioner of Income Tax v. Smt. Lalitha M. Bhat in 1996 ITR 257 , the question of law that was referred to the Court of opinion would read as under: Whether, on the facts and in the circumstances of the ease, the Appellate Tribunal was justified in law in holding that the share income from the association of persons includible in the assessee's hands as a member thereof is to be determined only after deducting from the association of person's Income Tax payable by it? 7. It was in the context of that question, the Bombay High Court has considered Section 86. The said Judgment is clearly distinguishable on facts. 8. In the result, we answer the question in favour of the revenue.